After years of fragmentation, the media industry appears to be reconsolidating. M&A activity is rising while streaming subscription bundling is also gaining momentum. While these streaming packages, like Disney's Disney+/ESPN/Hulu bundle, have, in some cases, reduced subscriber churn, over one-third (37%) of sports executives fear consolidation will negatively impact the value of sports media rights and almost half (46%) are still unsure what the impact will be. The effects of consolidation are already felt in European sports media, with the average annual contract value (AACV) by property decreasing or remaining flat among many major European football leagues.
Despite an uncertain outlook on the value of media rights, there are silver linings. Sports content remains valuable. It benefits from a low-risk profile compared to other entertainment properties thanks to recurring and predictable audience performances. While consolidation has decreased competition among legacy players, a growing cohort of non-traditional media buyers are acquiring sports rights and encouraging rights owners to rethink their content monetization strategies. These buyers include streaming services, technology groups, gaming companies, betting companies, and e-commerce marketplaces. This can be seen in Amazon and Netflix expanding their sports offering to include exclusive live broadcasts of NFL games.
Major players who are not broadcasters, like Netflix, Facebook, X/Twitter, Snapchat, and Google, will be key buyers of sports rights.
Strategy Director, Sports Mega-Event
Rights owners are also expanding deal making to include intellectual property (IP) beyond live rights while increasingly leveraging owned and operated (O&O) channels to engage emerging fans. Going beyond monetizing live games with legacy broadcasters exposes media rights holders to a broader footprint by providing new content use cases. This makes sense in a world where younger fans are becoming less interested in watching live games than their elders. Diversifying into adjacent, non-live content can increase fan engagement and offer new, untapped revenue opportunities for media rights holders.
To get the most out of rights distribution, executives must adapt their IP to meet the needs of a new crop of content buyers and an evolving, fractured global fan base. This requires moving away from a wholly B2B distribution strategy focusing on licensing raw content and towards hybrid distribution models that explore adjacent licensing verticals and O&O platforms. These platforms (which include league social media accounts, league websites, and official fan communities) are of great interest to sports industry executives: over 80% of them think O&O channels will be increasingly relevant for fan engagement.
We believe that media rights owners need to double down on realigning their content licensing model to changing market needs. Rights owners should adopt a hybrid approach that includes both content-based and product-based (e.g., O&O) licensing while maintaining clear principles throughout the deal-making cycle, including:
- Definition of the overarching strategic objectives of a deal (content monetization vs. content accessibility/promotion)
- Identification of target buyers and market scenarios, including corresponding rights strategies
- Selection of ideal scenario(s) to steer the rights sales/auction process accordingly
By elevating their strategy and ensuring excellent execution in line with these outlined principles, rights owners will be well-positioned to navigate and capitalize on a new era of IP monetization.
